In 2024, Environmental, Social, and Governance (ESG) metrics are taking on a new significance as financial institutions enhance their transparency regarding sustainable practices, while governments intensify efforts to regulate green initiatives within the sector.
In a conversation with Drisha Kirkman, the head of sustainability and program management services at Paymentology, insights were shared about the evolving expectations for ESG initiatives within the fintech industry.
Kirkman emphasized that as payments companies focus on digital transformation, integrating ESG goals into their new initiatives is becoming essential. Paymentology is currently working on advancing tokenization and virtual card solutions, reflecting a broader trend towards prioritizing digital advancement. Additionally, she pointed out a shift in consumer preferences towards sustainable products, which is driving businesses to adopt environmentally friendly practices that resonate with socially conscious buyers.
“The involvement of governments and regulators in sustainability is increasing, particularly concerning clean energy policies and corporate responsibility,” Kirkman noted. “Countries that implement such regulations and subsequently offer support to compliant businesses are witnessing economic benefits as a result.”
When discussing future trends in sustainable finance, Kirkman observed that ESG values are gaining greater prominence. There is a growing demand from both consumers and investors for transparency regarding a company’s social responsibility. “We can expect to see a rise in dedicated sustainability departments across various industries, not limited to payments,” she added.
She emphasized that maintaining transparency with clients and customers is crucial for advancing sustainable innovation within fintech. However, challenges persist, particularly economic constraints, such as the higher costs associated with eco-friendly materials or recyclable plastics. While the affordability of greener products and services is improving, small firms continue to face significant hurdles.
Looking ahead, Kirkman anticipates that numerous startups and fintech companies will pivot towards innovative, socially responsible solutions. Some fintechs are already measuring users’ carbon footprints during transactions, highlighting the environmental impact of these activities. The adoption of digital wallets is also surging, offering users a streamlined transaction experience while facilitating a more sustainable approach by reducing the need for multiple physical cards.
Kirkman has been instrumental in Paymentology’s sustainability efforts since 2006, a timeframe marked by substantial transformation. The company’s initial focus was on supporting staff and enhancing social impact within the communities it serves, but this has since evolved into a commitment toward climate-oriented solutions.
Kirkman underscored that transparency in corporate policies and a significant reduction in carbon emissions are key objectives for Paymentology. To address carbon reduction, the organization is promoting hybrid and remote work arrangements, initiating tree planting projects, and reducing travel by facilitating virtual meetings instead of in-person visits.
Concluding her thoughts, Kirkman stated that digitization will play a pivotal role in achieving ESG-related objectives. “While we’ve historically addressed the social aspect of sustainability, our current emphasis is shifting towards environmental initiatives. Our goal this year is to ensure our policies are transparent and accessible to the public as we document our core principles and the targets we aim to achieve.”